Monitoring the Great Deleveraging

How far along are households, governments and banks in the great deleveraging that's under way? David Wessel explains on The News Hub.

This transcript has been automatically generated and may not be 100% accurate.

... GB's ... I went back with all the news that once Lowenthal's will postpone and continues with me ... on ... this long warned business ... I sent a few weeks ago ... to some my colleagues when Wilmar had about two point seven percent Lemole moment and yet ... I think we're in a break at two point four level and then I didn't think it was gonna come as fast as it did and on and what are you surprised when you watch the market a long time ... countries the price under two percent Simon ... Steinman eyeing and change which promise to put a fifty year low ... um ... I think ... it will be the respondent ... is so compelling because ... capital just is looking for a safe place to start ... writing is running years running their tools to but wouldn't return to ... their study of water slides down each spot so ... in Switzerland France when the Swiss National Bank said aren't this was coming down you not been a bit of the price of the Swiss franc ... of the gold market is still somewhat Netflix of regulating ... of the Treasury market is like ... you can put in a ... two percent yield less than ... ideal for and you know a ten year risk ... it just seems ... quite ridiculous know as we follow are still around people put their twenty into commodities which pushed those ... over time but it does not seem to be happening ... the great Brightpoint's with leader but left it to David Wessel to talk about the great ... deleveraging which is continuing in the big question is when all we know how we have kick Off Highway a Altimo weenie in ... the hands of Baghdad David Zombies a quick question sometimes war is mine and an assistant ... for ... well I didn't seem to me that this is one of the really important questions understanding why the economy isn't doing better ... when you look at this great deleveraging I think it's useful to break into pieces and that's what I do in my column this week ... if you look at the banks in the United States they're pretty far along there in the fourth quarter ... they've raised capital they trust their balance sheets in some cases ... you we will call them all the ratios of leverage in the banking system ... they've come down quite a bit of the United States ... Europe is still somewhere near the Kitco ... I'm into that that that that they do not mind raising capital Mumbai them at school that's pretty outraged I know what a life of raising capital but as you seen with Citi and ... Bank of America also by selling some of their business and shrinking the asset side of the round ... I'm in the in the rest of the business community there really was an deleverage problem so that that's not very interesting ... where it's really really important what's going on with households ... and it's ... hard to figure out we know if you look at that ... the broadest measure is the debt to income ratios of households ... he went soaring in the late nineties into thousands that were back to two thousand and four levels ... the question is how much further do a household's water ... reduce their debt before the start borrowing again ... as a group we are really no ... one really interesting thing that I let the McCollam is what's happened ... to last house the housing debt ... mortgages is a shared the value of the houses ... and then as in kind at all ... basically that despite all the refinancing all the ... turmoil in the housing market because housing prices are falling ... in mortgage debt of course doesn't fall within ... that still pretty high ... so I'd say we're at best it has this kind of looking at the consumer household ... deleveraging enemies we along with ego is not a cheery as of now well into two things to be the first of all would you agree or disagree with David and if you can afford ... that right now you ... have a job that you feel secure in ... the now's a great time ... to be up going into debt ... would you do that ... if you have ... if you're optimistic about Yuriko AMTD over borrowing that has absolutely ... and that's when I think so many people are frustrated to great time to refinance your mortgage ... but with so many people on able to refinance because their mortgages or greater than either house ... they're not getting the benefit of low interest rates amid has been giving the benefit of the ... principal reduction ... he has been ... signed ... up for a long time that's a huge thing now I guess that's all bad news it sounds like what are some good news with our often Europe Frankfurt into it on how much ... oil in Europe ... I think basically we have two things going for say Europe doesn't one as ... we did retaken the menace of the banks have taken some other medicine the government has forced them to recapitalize ... Europe is the managing director of the IMF win at the other thing is that the man ... secondly ... we don't have to worry about United States breaking in to fifty different ... currencies in Europe that ... didn't SUNH until about three seconds left well you know we're thinking about the last ten years of for for the U S economy didn't ... just thinking ... when you look at the numbers right on the west of real wage growth in this country has been very for the last decade ... the really sustain our standard of living white borrowing and as we reduce our borrowing will or standard of living ... of Nansen necessarily decrease if wages stay with them when they ... apparently ... was gonna live with an army ... when it loses a glowing white to leave this Simon thank you Brian much that it was all the Wall Street on the square device nicely with the Nissan utility point now